They say that if you want to catch fish, you gotta go where the fishermen ain't. My philosophy: You have to get your inspiration from places others don't or won't. Few things are worse than the parroting of wisdom received from folks who aren't all that wise. Also, this blog has a kind of cool acronym.

2 entries from October 2015

Tuesday, October 27, 2015

I Suspect That Public Relations Largely Dismisses Blockchain Technology Because of Its Strong Association with Bitcoin. This is a Mistake.

In 2000 or so, I was introduced to the concept of the “weblog” by Dan Gillmor, then a columnist at the San Jose Mercury News. A new world opened up to me at a time when I was looking at my day-to-day work as a PR person in Silicon Valley and asking “Is this all there is?” In August 2001, I started blogging and writing about these and other developments. The rest of the story should be familiar to most of the people who read this; for everyone else, there’s LinkedIn. Suffice to say, it’s been an amazing time to be in this line of work.

Of course, a lot of innovation on the social web has happened since, to say nothing of the new and different ways companies continue to adapt, leverage, and at times struggle with it. However, granting at least one notable exception, very little has affected me in quite the way that my first personal discoveries of the social web did nearly a decade-and-a-half ago.

This is changing. As I continue to observe and engage with the community that is exploring blockchain-based concepts, I find this kernel of inspiration germinating once again. The signals are impossible to ignore and the possibilities for communications and community engagement are far too compelling.

All of this should be familiar territory: We saw it to roughly the same degree (though with considerably lower stakes) in the 2000s as the social web was coalescing.

So, why do I feel compelled to do explore blockchain applications for corporate communications now? There are five principal reasons:

It’s Uncharted Territory for PR:As I’ve written earlier, PR needs to figure out how to deal with hierarchy-averse environments—quickly. Far too many in our trade don’t know what to do with a media property that doesn’t have an editor-in-chief or a mailing address. So, imagine what happens when a reputation-significant online source or service exists merely as highly distributed software, perhaps even outside the control of its creators. That’s the world I want to be prepared for and help others to do the same.

It’s Where the Creativity Is: One cannot help but be in awe at what the communities who are building these technologies and applications are imagining and bringing to life.

It Uniquely Addresses a Very Real Need: For any scenario that requires collusion-resistant verification, high levels of transparency, or a solid proof-of-performance, blockchain technology answers the challenge elegantly. The demands for corporate transparency are only going to increase and, now, companies have at least one tool that puts some real teeth in the oft-promised ideal of self-regulation.

It Ticks All of the Right Boxes for Me: Open source? Voluntary collaboration? Peer-to-peer frameworks? Flummoxed government institutions? Consensus-driven approach? Corporate labs trying to make sense of it all? Everything about this screams “Phil.”

The Advertising Industry Hasn’t Yet Figured Out a Way to Pollute It: I feel like somebody or a group of somebodies will make this all about who launches a new potato chip flavor on a blockchain first. I would consider that an abuse of the medium, especially at this stage. This is much bigger than that, and much bigger than social media was.

So what am I doing? At this early stage, I am:

Walking the Walk: As a simple demonstration, the text of this post has been registered on the Bitcoin blockchain. The cryptographic summary of this text has been saved in PDF and submitted to ProofOfExistence.Com, where it has been notarized. There is now indelible proof that I published these thoughts today, no matter what happens to my blog, LinkedIn...or even ProofOfExistence.Com.

Doing My Thinking In Public: As before, I’m writing. I’m thinking. Hard. Maybe years from now I’ll look about my early blockchain-related writings the way I now look at this impenetrably verbose stinker, but at least I’m investigating the possibilities. It’s Cunningham’s Law in action.

Asking Questions of Smart People: I recently authored an article about smart contracts with the thoughtful and generous input of Sergey Nazarov, co-founder of SmartContract.Com. I’ve also been corresponding with Bitnation’sSusanne Tarkowski Tempelhof for some time now, discussing the broader issues of competitive governance, trustless verifiability, and individual freedom. I have a list of all the people I want to talk to across all different points of the value chain, from core development to commercialization. (If you think you should be on this list and would like to chat, you know where to find me. Coffee/drinks/nachos on me.)

Sharing What I Know and Believe: Last week, I presented about bitcoin and blockchain technology for Edelman’s “Wisdom Wednesday” global internal education series. From what I can tell, it was well-received. At least one executive has expressed interest in receiving a briefing on this topic. Some of these efforts will undoubtedly spill into my public life at conferences and posts like this.

The Social Purpose Case for Using Bitcoin's Core Technology

In public relations circles, corporate social responsibility (CSR) is often discussed in the narrow context of a communications discipline. However, its messages obviously ring hollow when they are not supported by action and accountability.

So, what if both the action and accountability were put in code, were made more or less automatic, and produced open, reliable, and indelible reporting? With the right company and no small amount of will, this is possible today--what some have called “code as law” rather than “code of law.”

As I’ve written inearlierposts, the promise for the blockchain or similar “cryptoledger” technologies is immense, stretching well beyond the maintenance of the highly distributed general ledger for cryptocurrencies like Bitcoin. I’ve lately been fascinated by the concept of so-called “smart contracts” (a digitized promise, in effect) and, in particular, how they might form a uniquely powerful foundation of hyper-transparent CSR.

The term “smart contracts” describes a distributed application that lives on a blockchain and can automate a business process. Thanks to the combination of peer-to-peer technology and open source, such a promise is public, survivable, and available for inspection. In other words, it’s the perfect platform for not only CSR communication but the actual activation and reporting of the entire CSR program’s initiatives.

By way of example, consider the following contract logic:

IF the profitability of the firm is >[X]%, AND

IF the firm's supply chain is certified by [insert reliable NGO here] as at least [Y]% fair trade, AND

IF you are a holder of preferred stock as of [date], THEN

Said shareholders will receive [$Z] per share in their electronic wallets within a day of the firm's quarterly earnings announcement.

The first condition establishes a minimum level of company performance that would trigger the special dividend. (Let’s not discount the value of profit and generating lots of it. A company must be able to invest in itself to survive.) The second condition establishes that a socially responsible goal has been achieved during the reporting period. The final condition is optional, but is intended to reward long-term investors who, in addition to seeking a return, supplied early capital by purchasing shares based on the promise of socially responsible investing.

Once the company and the NGO digitally “sign” the contract after the conditions are met for the quarter, the dividend is distributed automatically. For the sake of dispute resolution, one might even consider the additional condition of a third party’s signature (like an auditor’s), with the dividend triggered when at least two out of the three parties agree that the terms have been fulfilled. (Three parties should be enough to mitigate potential collusion for this particular contract, but could be a topic upon which reasonable folks might disagree. More parties could be added, of course.)

Why would a company do such a thing? To some degree, it’s an acceptance of the inevitable. As it becomes increasingly obvious that regulators cannot address the Internet Age with tools forged during the Great Depression, stakeholders may demand that the promise of self-regulation take the form of smart contracts. This approach also offers efficiency: Once set, the legal and accounting overhead required to run the smart contract is minimal if all parties agree to the dispute resolution mechanism.

Another point to consider: Tell shareholders that they won’t be getting their special dividend that quarter, and you have a very powerful group--above and beyond fair-trade activists--that will start asking a lot of questions about both social responsibility and managerial effectiveness. Such questions would include:

Was profit missed because of a possibly vacant fair trade promise, made to the early investors who invested based on that pledge?

More damningly, was profit maximized at the expense of fair trade procurement?

Were there factors external to the smart contract, such as runaway expenses or executive pay?

The large upside of executing CSR agreements in the blockchain as described here is that everyone gets a highly trustworthy proof of performance, since the resources required to hack or corrupt a sufficiently well-supported blockchain are extreme. (It would take many times the combined computing power of the top 500 supercomputers to undo the Bitcoin blockchain, for example.) Companies that engage in CSR initiatives in this provable way can point to more than promises and vague numbers--they would have a clear and easily verifiable track record. They could show their investors, partners, regulators, employees and even customers conclusive proof of their commitment, in a format that all those parties would trust. This approach would make the impact of every CSR initiative far more meaningful.

Code Of Conduct

Comments here are unmoderated and are operated on a use-until-abused basis. I will adopt a moderation policy if I feel that my visitors abuse this privilege.

I will delete any comment that is lewd, crude, lascivious, racist, sexist, libelous, off-topic, or injurious to the privacy of a non-public individual. Such users will be forever banned from commenting on this site.

From time to time, certain comments will be investigated if they appear to be marketing spam. The offending company gets one free pass before public censure.